Why should small business owners understand their financial statements?

Yes! Understanding your financial statement is akin to being able to navigate when you have a boat.

Understanding your financials is extremely important for many reasons:

• You understand your bottom line (i.e. if you are making money or not)
• You understand how much money are you making (versus just putting that money in an investment certificate in a bank, etc.)
• Your growth or decline (which direction are you heading? towards profitability or a loss making venture)
• Your costs
• Your liabilities (are you sinking?)
• Your receivables (how much money is owed to you?)
• Areas where you can trim your expenses / costs to become more profitable
• Your hot selling products/services and vice versa
• Being well versant with your financial statement allows you to better communicate, negotiate and interact with partners and customers.
• Also, so that you don't get taken for a ride, and find out too late

...and finally is this all worth it? For all the time and effort you are putting into your business.